I am an expat living in Japan. I have an iPhone 7 Plus bought in Japan through Softbank. I use Suica on my iPhone as well as two credit cards (Master and Visa) issued by Japanese banks and make payments with Apple Pay all the time. Works flawlessly. Two weeks ago I had to go to the UK on business. While there I decided to test Apple Pay with my Japanese bought iPhone. Popped into a McDonald and asked to pay using Apple Pay. Clerk said "no problem, just hold the iPhone over the machine." Chose my usual card, scanned my thumb, and nothing happened. Tried several times, still nothing. Ended up paying in cash instead.
Back in Japan, after some detailed research on Japanese websites I found out that actually Apple Pay in Japan is not really Apple Pay. All these issuing banks in Japan heaven't made their cards ready for Apple Pay; what they have done is simply to allow their cards to use iD and QuicPay on an iPhone in conjunction with the Felica system. Nothing more.
Unless the Japanese banks upgrade their cards for Apple Pay outside Japan, Japanese issued cards will work only in Japan.
However, having said that, if you have an American issued credit card and set your iPhone's region to USA, then I'm sure it will work since the iPhone 7 also has the standard NFC chip on top of the Felica one.
